Travel Market Report - Travel Agents React to Brexit

Travel Market Report - June 2016

The travel industry is reacting to Brexit with both optimism and anxiety.

The United Kingdom yesterday became the first major country to leave the European Union—sending the country as a whole, and the travel industry in particular, into a state of uncertainty.

Franc Jeffrey, CEO of U.K.-based EQ Travel Management, which also has offices in Boston, noted that “everybody here is kind of in a daze; nobody knows any facts and figures. But [with the value of the pound falling], it probably will be a hit to travelers leaving the country, and good for those coming.”

Still, he added, “we don’t know what’s going to happen with passport control and border checks—international driving licenses and cell phones could be a big issue; we just don’t know what will happen there for day-to-day travelers, and I can imagine border checks being inconvenient.”

Sandy Anderson, owner of Riverdale Travel in Coon Rapids, MN, noted that “it is very early to say exactly but there may be some push-back as there is passionate opposition. My personal opinion is there will be some great values but I think there will be some protest as well. I hope it gets sorted out soon as Great Britain is a great tourist destination."

Adamarie King of Connoisseur's Travel in Chicago, a contributing editor to Conde Nast Traveler, said, "I don’t think the Brexit Vote means much to the travel industry and travelers. We will still travel to Britain, and while the pound did drop a bit, it is already moving back up. I imagine the division with Scotland will be exacerbated, but again I don’t think that will really affect the traveler."

Lisa Chambers Fletcher, a travel agent in Davidson, NC, said regardless of uncertainty, dropping prices are always good news for travelers. “London hotels have always been so incredibly pricey,” she said. “There is so much to see and do there that I would like to think more Americans will be able to visit while the dollar is strong. I'm keeping a close watch on airfares as well.”

Valerie Wilson Travel co-president Jennifer Wilson-Buttigieg agreed. “Travel is in fact a necessity for business travelers and is a wonderful part of exploring life for leisure travelers. The British pound is at its lowest level since 1985! Britain is on sale! Travel now!” she said.

Indeed, said Jim Mazza, COO of travel-agency consortium TRAVELSAVERS, "If I were a supplier in the U.K. market, I would definitely have a Brexit sale ASAP."

The process of leaving the E.U. will begin with Prime Minister David Cameron—who resigned after the results came in—invoking Article 50 of the Lisbon treaty, a step that could take more than two years. After that, there is no precedent to how the country will separate its economic and political links from the E.U.

In the most immediate consequence, the British pound fell more than 10% in six hours, from $1.50 to below $1.35, its largest dip in decades.

Still, most saw that as a temporary issue. “The Brexit vote brings some uncertainty, but market disruptions will be short-term,” Allianz CIO Andreas Gruber told TMR.

The Cruise Lines International Association also hopes the vote’s short-term effects won’t last. “The cruise industry relies on stable business frameworks and regulatory certainty to operate efficiently. This is why CLIA hopes that Europe’s stability and business environment will not be unduly affected,” it said in a statement.

But as the hours passed, some grew more concerned rather than less. At Globus, air analyst Jon Duey told TMR late on Friday afternoon, "After the short term Shock and Awe dissipate, leisure travel to England will pick up on the strength of the dollar over the pound. Business travel is a different matter; it depends on how the various contracts are renegotiated. Some folks (like IATA) are predicting serious drops in traffic. I feel those predictions are too dire, but the business traffic will drop in/out of England enough to make it sting. I am more concerned with a probable drop in English leisure traffic to North America. This will have U.S. tour operators scrambling to fill tours in the next few years."

At MMGY Global, director of global strategies and client services Chris Pomeroy agreed that "for outbound American tourism there will not be too many other short-term concerns, and any major changes will only come into affect after the two-year transition period. What we need to keep an eye on now is the possible breakdown of the United Kingdom as Scotland and Northern Ireland consider their own referendum for independence (both nations voted massively in favor of remaining in the EU)."

But the flip side of the weak pound, he noted, "is that it will affect the spending power of U.K. residents in the USA. If we add to this political and economic uncertainties and a probable short-term downturn in the U.K. economy I would expect less U.K. visitation to the USA in 2017."

Peter Bates, founder and president of Strategic Vision, an advisor to global luxury hotel brands who is in Europe today, told TMR that “Scotland wanted to stay in, London wanted to stay in, Northern Ireland wanted to stay in, but the rest of England and Wales wanted out. They couldn’t see the advantage to being in the E.U. that the rest of the country saw.”
But, he noted, “I don’t think it’s a big issue for tourism at this time. It will be quote a long process and it will not be rushed; we won’t even get a new prime minister until autumn. The industry should sit back and relax. People have short memories. Britian will still be a great trading nation, so travel will continue on the business side, and on the leisure side people will still want to visit. And because of the value of the pound against the dollar, it’s a great place to go.”